Despite Adams Media Research projecting back in June that 14.4 million US households would be able to play Blu-Ray movies by the end of the year, a consortium of movie studios and electronics manufacturers estimate that the actual figure is now likely to be closer to 10.5 million.

The consortium, known as the Digital Entertainment Group, specified last week that the user-base of Blu-Ray compatible devices would come mainly through PS3 sales, of which the consortium predicts will have 8 million US users before 2009. Research group Adams Media however estimated in June that over 10 million PS3s would be sold in the US by that time.

The price of Blu-Ray players are taking a considerable drop in America right now in the hope that units for $200 will encourage adoption of the format.

One member of the consortium, Sony Pictures Home Entertainment president David Bishop, said that "the only dark cloud is the economy" before adding that the PS3 sales in America remain on target and "show no slowdown." Currently there are 5.7 million PS3s in US homes, with Sony expecting that figure to climb another 4-5 million before March. "We remain pretty confident that we'll meet our targets for the fiscal year," said a spokesperson for Sony Computer Entertainment America.

The panel also agreed that the format is very young, having just only just won the format battle with the Toshiba and Microsoft-backed HD-DVD format. DVD revenue continues to fall, dropping 6 percent through 2008.

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Executives hoping that the weak consumer embrace of high-definition discs will strengthen during the holiday season thanks to clarity on format and hardware issues suddenly face this rude awakening: It's the economy, stupid.

The format war is over, hardware prices are falling and studio marketing efforts finally are taking hold with retailers. Yet the economic downturn has become a chief reason for fearing that holiday sales of Blu-ray Discs will prove more naughty than nice.

Hollywood is counting on Blu-ray -- winner of a bloody format with now-failed HD DVD -- to become the next-generation format of choice for home entertainment, compensating for a DVD cash cow that's starting to run a bit dry. But consumer concern about the worsening economy couldn't have spiked at a more inopportune time: the cusp of the holiday gift-buying season.

"The economy is the biggest challenge, because there are just so many pieces to the Blu-ray puzzle that consumers face," said Lori MacPherson, GM of domestic home-entertainment at Disney. "You need the high-definition television set, you need the player, you need the cables, you need the software . . ."

MacPherson still believes Disney's seasonal slew of new releases and catalog titles in the Blu-ray format will help stir previously resistant consumers to check out the HD format. But industry colleagues participating in a panel discussion Tuesday at the HD3 conference in Century City agreed that the onset of recession won't help.

"The economy is hitting everybody," said Danny Kaye, executive vp research and tech strategy at Fox. "But we still look forward to a great fourth quarter."

If that sounds a bit like whistling past the HD graveyard, it should be noted that there also are distinctly positive bits of news on the home entertainment horizon.

"I know the economy is tough right now, but the manufacturers are really bringing down the price of their HDTV sets," Paramount vp marketing Chris Saito said.

Blu-ray player prices also are heading south, though perhaps not as quickly a recession-minded consumers might like. Although several manufacturers are flirting with the $200 price point long considered key to platform launches, most Blu-ray players still sell for considerably more.

Then there are the discs. Movie releases on Blu-ray sell for upward of $25, whereas most DVDs retail for $15 or less.

"We're all constantly looking at (disc) pricing," Sony vp business development Rich Marty said. "What it amounts to is that we'll wait until after the fourth quarter and see how it goes."

Blu-ray backers can take heart in the relatively modest negative impact of economic downturns on tech rollouts, said analyst Tom Adams of Adams Media Research in Carmel Valley, Calif.

"It may slow adoption down a little bit if there's a recession brewing," Adams said. "But in the adoption of other successful technologies over the next 50 years, it hasn't been more than a speed bump."

In any event, Blu-ray proponents shouldn't panic over the prospect of a longer slog toward broad consumer embrace than some might have hoped for, Fox's Kaye said. "It never happens overnight," he shrugged.

Contrarians have suggested the spread of HDTV sets might not prompt a corresponding rush to Blu-ray if consumers opt instead to boost DVD image resolution via so-called upconverting technology. But those kind of image manipulations fail to match Blu-ray standards and won't pass muster with the majority of consumers, MacPherson said.

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Blu-ray is in a death spiral. 12 months from now Blu-ray will be a videophile niche, not a mass market product.

With only a 4% share of US movie disc sales and HD download capability arriving, the Blu-ray disc Association (BDA) is still smoking dope. Even $150 Blu-ray players won't save it.

16 months ago I called the HD war for Blu-ray. My bad. Who dreamed they could both lose?

Snatching defeat from the jaws of victory
Delusional Sony exec Rick Clancy needs to put the crack pipe down and really look at the market dynamics.

In a nutshell: consumers drive the market and they don't care about Blu-ray's theoretical advantages. Especially during a world-wide recession.

Remember Betamax? SACD? Minidisk? Laser Disk? DVD-Audio? There are more losers than winners in consumer storage formats.

It's all about volume. 8 months after Toshiba threw in the towel, Blu-ray still doesn't have it.

The Blu-ray Disc Association doesn't get it
$150 Blu-ray disc players are a good start, but it won't take Blu-ray over the finish line. The BDA is stuck in the past with a flawed five-year-old strategy.

The original game plan
Two things killed the original strategy. First the fight with HD DVD stalled the industry for two years. Initial enthusiasm for high definition video on disk was squandered.

Second, the advent of low cost up-sampling DVD players dramatically cut the video quality advantage of Blu-ray DVDs. Suddenly, for $100, your average consumer can put good video on their HDTV using standard DVDs. When Blu-ray got started no one dreamed this would happen.

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What is supposedly the world's last "HD DVD" release is now available exclusively at DVAspecial. The title in question is P2, a 2007 horror film which performed poorly at the box office, the title is available for $26.99.

Interestingly, Brad Kugler the CEO of DVA claims to have inked a deal with an unknown studio for more HD DVD releases. It remains unclear if Mr. Kugler is referring to new titles or those previously released.

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Straight from El Jobso's mouth at today's notebook keynote: "Blu-ray is just a bag of hurt. It's great to watch the movies, but the licensing of the tech is so complex, we're waiting till things settle down and Blu-ray takes off in the marketplace." Phil chimed in with "We have the best HD movie and TV options in iTunes." Damn. As if that weren't enough to make Mac-lovin' home theater junkies cringe, Steve also commented (when asked about the dearth of HDMI in his introductions) that HDMI was "limited in resolution," and Philip Schiller elaborated by saying that "for typical computer use, DisplayPort is the connector of the future."

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An exasperated Aaron Greenberg has flatly denied there are any plans to add Blu-ray to the Xbox platform. Seriously: it's not happening.

"We have no plans to integrate Blu-ray into the Xbox experience," the Microsoft production boss told Major Nelson in Tokyo in response to recent rumours that a contract had ben awarded to create an external Xbox 360 Blu-ray player.

"We believe that we shouldn't force people to pay for things they don't want. We also believe that the future's digital, and that's why we've invested in a massive library of entertainment content, that's why we're bringing things like Netflix to members in the US, that's why we're growing our library in Europe, that's why we're adding all type of entertainment experiences around the world."

The exec went on to ridicule the format, saying that years from now there'll be an expression, "It got Blu-rayed," and that, "It's pretty clear it's not the next DVD".

"And Blu-ray: who knows? I'll tell you one thing: if you look at retail sales and availability, there's not a lot there, and what is there is at a premium," he said.

"No one knows what Blu-ray will be. It's pretty clear it's not the next DVD, right? The days of one physical format being the standard are gone.

"I went to Sony's booth, and it used to be that their whole booth was Blu-ray. It just keeps shrinking down. Now it's just this little corner and there's no one there and it's like, there's a heart sign and it's got 'Blu-ray' and some movies. It's interesting."

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It may have lost the home entertainment war to Sony's Blu-ray technology but tougher economic conditions have breathed new life into Toshiba's HD DVD format.

Sony delivered what appeared to be a knock-out blow to HD DVD in the spring when it secured backing from the biggest Hollywood studios, which then dropped their support of the Toshiba technology.

But aggressive price cuts have maintained the market for HD DVD players, which also play standard DVDs.

The cost of discs has fallen from $40 in some cases to as little as $10, while players can be picked up for less than $60, compared with about $250 for a Blu-ray player. Thousands of HD DVD titles continue to be available, including relatively recent blockbusters, such as American Gangster .

This has maintained demand for the format, which continues to be supported by online retailers, such as Amazon and Buy.com, smaller electronics chains and second-hand stores. "We expected to see a huge increase in Blu-ray sales and HD DVD dying [when Blu-ray won the format war] but it just hasn't happened," said Jeff Wisot, vice-president of marketing with Buy.com, an online retailer.

"HD DVD sales are still very strong," he added.

Ryan Kugler, president of Distribution Video & Audio, the largest buyer of excess video and audio inventory, has bought millions of unsold HD DVDs that were returned to the studios by big retailers.

He has resold more than 1m units to online retailers and discount stores and expects to sell another 2m-3m in the run-up to Christmas.

"Cheap entertainment always does well in a recession or depression," he said.

With Hollywood studios no longer releasing new titles on HD DVD, retailers know that the format has a limited shelf-life.

"There's a much more limited selection of titles [than with Blu-ray] because there wasn't the same level of studio support for HD DVD," said Andy Parsons, chairman of the Blu-ray Disc Association.

Mr Parsons said sales of Blu-ray discs are up 53 per cent on last year.

"We're only two years into the life of this format and it took longer than that for DVDs to take off," he said.

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CNET's Crave on Friday reported on Nielsen's latest VideoScan figures, showing that Blu-ray Disc's market share in the video disc market has slumped in the past week.

According to Nielsen, Blu-ray's market share dropped to just 8 percent of the overall market, giving DVDs a whopping 92 percent ownership.

Granted, those figures show only one week's performance, and Blu-ray may have a huge week soon and capture more of the market, but let's be honest with ourselves: do we really think that will happen?

According to a study released in August by ABI Research, more than half the people it surveyed had no plans to buy a standalone Blu-ray player in the near future, and 23 percent are considering it, but not until 2009.

When your format is limping along with just 8 percent of the market, the last thing you want to hear is that only 23 percent of the population actually wants a Blu-ray player.

But wait! There's always the PlayStation 3, right? Surely, everyone who knows about Blu-ray is picking up a PlayStation 3 to watch their movies. After all, won't that product be the savior for which Sony has been waiting?

Please. According to NPD's latest numbers, Sony sold just 185,000 PlayStation 3 units, which represented a 17 percent drop, compared to July sales numbers. Worse, it barely beat out the PlayStation 2, DVD player and all.

The PlayStation 3 isn't going to be Blu-ray's savior, and neither is that sub-$200 price tag. At this point, I simply don't see how Blu-ray has a chance.

Eight percent of the market is nothing. Sure, it's a young product, and DVD started out slowly too, but do all the people who espouse the belief that Blu-ray will succeed somehow forget that the jump between VHS and DVD was substantial?

Find yourself a VCR, and pop a tape into it. After that, throw a DVD into your player, and watch it on your HDTV. When you're done with that, do me a favor, and pop a Blu-ray movie into your PS3. Notice anything shocking when comparing VHS to DVD and anything, well, disappointing when comparing that DVD movie to Blu-ray?

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One of the driving forces behind Sony's plan for the PS3, Blu-Ray, is showing signs of decline.

The cause could be a variety of factors, from the failing economy to the summer gaming doldrums, but the effect is clear: Blu-Ray as a media format is in decline.

The news has to be worrisome for Sony, whose PlayStation 3 console has the Blu-Ray disc format as a cornerstone of its strategy to get a multi-purpose gaming and media hub into homes the world over.

In response to the sluggish sales, Sony even went to far as to drastically slash its Blu-Ray player prices to the magic $200 mark, a la Microsoft with the Xbox 360, with other models going for as low as $250 as of this writing. Tech blog Engadget called the new price points "unquestionably delectable," but another observer at the Industry Standard said the cuts and a number of other indicators betray the fact that conditions may not be so rosy.

For example, in the latest Wired magazine, Sony and Microsoft went so far as to include a free Blu-Ray disc, the seven part film noir flick Coma, as part of a full page insert.

"I don't know how much this is costing Sony and its partners, but it can't be cheap -- Wired's paid circulation is 706,494, and this press release indicates that other magazines may be involved," wrote Industry Standard writer Ian Lamont.

Sony is betting the price cuts (and the PS3) will bolster Blu-Ray in time for the winter holiday, but Lamont is wary--especially as more and more consumers turn to the Internet and services like iTunes for their HD content.

"Sony better hope that mainstream consumers feel the same way [about the price cuts], or the company risks another weak Christmas for Blu-ray this year -- and losing out in an even bigger way when consumers begin to turn to the Internet for their HD content," he said.

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Samsung has said that it sees the Blu-ray format only lasting a further 5 years before it is replaced by another format or technology.

"I think it [Blu-ray] has 5 years left, I certainly wouldn't give it 10", Andy Griffiths, director of consumer electronics at Samsung UK told Pocket-lint in an interview.

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As a long-time reviewer of Toshiba products, I was dutifully impressed with the XD-E500. Like other Toshiba DVD players, this model lived up to its reputation of producing excellent images from both movies and music videos. Aurally, this model passes both Dolby Digital and DTS soundtracks.

The XD-E500 is a serious upconverting progressive scan DVD player, and all of the images displayed on the LG 52LBX HDTV had a clarity and depth of field giving the illusion of near HD-quality from a standard DVD-Video player. If you want to be a stickler, you can always put on the Video Essentials test disc or use the Home Theater Demo disc featuring Mannheim Steamroller, and watch test patterns to measure gray scale (and I did), and calibrate and test different multi-channel audio signals. But, the proof is in the pudding – sort of speak --, and let's face it, a DVD player and an HD television are the perfect marriage to watch movies and music videos – not test patterns.

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Why is the DVD forum planning updates to the HD DVD format when it is "long gone" so to speak? The odds of HD DVD coming back to the market has a movie format are long gone. Toshiba own's the right's to the HD DVD format so you can pretty much count out it will come back for movies. Just to put another nail in the coffin, Toshiba along with other companies are looking into flash drives has a new format to distribute content, Toshiba is currently holding the "best" flash technology.

Since we can count out HD DVD coming back for movies, how about gaming? But what console makers would use HD DVD?

Sony: I highly doubt Sony will be using HD DVD….nuff said

Microsoft: Microsoft is probably one of the biggest contenders, they are pushing digital distribution to the max and really don't seem like they will "kneel" before the BDA to have a Blu Ray attachment for the Xbox 360. Microsoft and Toshiba are really close, since Toshiba owns the HD DVD patents their is no reason why a partnership cannot happen. This would also help Microsoft make has much money has possible, since only Toshiba, Microsoft, and possibly the DVD Forum will collect payments. If Microsoft does not include a external Blu Ray drive this generation you can be positive the next Xbox will not have a Blu Ray drive. Microsoft known's regular DVD's will not work well in the next Xbox has a standard medium, odds are they are looking for better. For me personally, the Netflix announcement along with the new partnerships at E3 killed off any chance of a Blu Ray drive coming to the Xbox 360, it just goes to show Microsoft is serious about this and will push it.

Nintendo: One can assume Nintendo will release a "next generation" console along with Sony and Microsoft. If they do they might try to copy the success of the Wii. I doubt they would go full HD DVD, however it seems like the 3X DVD which is only usable in a HD DVD player may fit their needs.

New Contender: Suppose Atari, Sega, or someone new decided to throw their hat into the console market, would they use it? Odds are they won't if they are appealing to the masses by being a gaming console and a entertainment center. If they want to appeal to the gaming audience and deliver a good experience at a low cost I could see them slapping a HD DVD drive into their system.

Of course this could be completely wrong and the DVD forum is just doing it to keep a complete format in it's vault. Remember, this post is just speculation and nothing more, there is a chance this is completely wrong and their is a chance it's not far from the truth. Feel free to make your own theory's about this below, keep the comments appropriate, don't flame if you disagree, instead just tell us in a civilized manner.

What are your thoughts on this matter? Do you think the DVD forum will do something with HD DVD? Do you believe a gaming console may see a HD DVD drive in it?

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Hopefully by now, everyone in the consumer electronics industry knows that you need a high-definition program source playing a high-definition program to get true high-definition pictures. A high-definition display alone is not sufficient: everything along the playback chain needs to be high-def.

That's not always possible. Some consumers are reluctant to invest in a Blu-ray Disc player; and more important, many people have large collections of standard-definition DVDs that they want to view on their high-def displays.

Toshiba of Canada Ltd. says its new XDE ("Extended Detail") player is aimed squarely at this audience. Arriving in September at $159.99 retail, the XDE player is an upconverting DVD player with some extra picture-processing features.

Using the Picture Mode button on the player's remote control, viewers can toggle through three different modes (or leave picture processing off). The Sharp mode activates edge-enhancement and noise-reduction processing after 1080p upconversion. This makes the picture look cleaner and crisper, Toshiba says. The Color mode performs intelligent colour remapping, enhancing blues and greens. The Contrast mode boosts black level in dark scenes, bringing out detail in dark areas. All the processing performed in the Sharp mode is also performed in the Color and Contrast modes; but Color and Contrast processing cannot be combined.

Toshiba demonstrated the new player during a day-long media presentation in downtown Toronto on August 19. In one of the demo rooms, there three identical Toshiba Regza 42-inch LCD televisions, all operating in Standard picture mode. A Toshiba XDE player was connected to one, a conventional Toshiba SD-6100 upconverting DVD player to another, and a Samsung BD-1500 Blu-ray player to the third. The Samsung unit was playing the Blu-ray version of Spider-Man 3; and the other two players were playing the DVD version.

From a couch eight feet from the screens, the XDE player with picture-processing turned on produced a picture that looked noticeably sharper than the regular DVD player. For example, there seemed to be more facial detail in a close-up shot of Flint Marko (Thomas Haden Church). More important, the XDE processing did not appear heavy-handed; there were no distracting artifacts like halos. From eight feet, the XDE picture looked sharper even than the Blu-ray version, though a discerning viewer could see that there was more real detail (as opposed to edge enhancement) on the Blu-ray Disc. From four feet, the additional resolution of the Blu-ray Disc was obvious; it just looked more realistic in every way. While not many viewers will sit this close, the difference between XDE and Blu-ray (in favour of Blu-ray) would be pretty plain on a 55- or 60-inch display at normal viewing distances. Toshiba also compared its XDE player and the Blu-ray machine both playing DVD versions of Spider-Man 3; the video upconversion on the XDE player looked sharper and clearer.

A second room had two identical 42-inch Toshiba Regza LCDs, one connected to an SD-6100 DVD player and the other to an XDE player. On the prison scene in Batman Begins, dark details were more discernible on the XDE player with Contrast processing turned on; Colour processing brought out blues in the prisoners' uniforms.

Kate McCarthy, DVD Product and Marketing Manager for the Consumer Electronics Group of Toshiba of Canada Ltd., says XDE isn't intended to take the place of a true high-def sources like Blu-ray. It's aimed at people who want the best possible viewing experience from their existing DVD libraries, she said. "We believe XDE can co-exist very well with next-generation formats," McCarthy commented.

McCarthy cited data from NPD Group Inc. showing that Canadian retail unit sales of upconverting DVD players grew by 133% in the first six months of 2008, compared to the same period in 2007.

The XDE can output 24fps 1080p video; it's the only upconverting DVD player on the market with 24fps capability, McCarthy says. It can also play discs with DivX content and features Regza Link, Toshiba's implementation of HDMI CEC, for passing remote-control commands from one component to another over an HDMI connection.

The player also has a self-demo mode, invoked by entering a special sequence of keystrokes on the remote control. In Demo mode, the player will automatically cycle through picture modes, performing sharpness processing for three seconds, followed by similar demonstrations of colour and contrast processing.

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XDE offers enhanced picture performance from standard DVDs.

WAYNE, N.J., Aug. 18-Toshiba America Consumer Products, L.L.C. ("Toshiba") today announces its new video enhancement technology for DVD with the introduction of the XD-E500. XDE, or "eXtended Detail Enhancement," is more than just DVD upconversion. XDE takes DVD picture quality to a whole new level. In addition to providing upconversion from 480i/p up to 1080p, XDE offers user selectable picture enhancement modes that allow for greater detail, more vivid colors and stronger contrast that bring standard DVD quality closer to the HD experience. XDE technology lets consumers enjoy their existing DVD libraries in a whole new way.

"Consumers have embraced the DVD format like no other technology and invested in large libraries of their favorite movies. As the market moves towards high definition, XDE lets them experience their existing DVD library and the tens of thousands of DVD titles in a whole new way," said Louis Masses, Director of Product Planning. "XDE offers consumers a simple solution to add on to their HDTV purchase. XDE works with existing DVDs to deliver a near HD experience with enhanced detail and richer colors. Toshiba is delivering to consumers what they want-a high quality experience at an affordable price."

XDE Flexibility

In addition to upconversion from 480i/p to 1080p, XDE technology offers consumers the ability to customize their viewing experience to their liking with its picture mode settings. With these three selectable settings-Sharp, Color and Contrast-users can get the most out of their DVD movie-viewing experience on their terms.

-- Sharp Mode offers improved detail enhancement that is one step closer to high definition. Edges are sharper and details in movies are more visible. Unlike traditional sharpness control, XDE technology analyzes the entire picture and adds edge enhancement precisely where it's needed.

-- Color Mode makes the colors of nature stand out with improved richness. Blues and greens are more vivid and lifelike. Color Mode combines the improvement in color with the detail enhancement of Sharp Mode and is ideal for outdoor scenes.

-- Contrast Mode is designed to make darker scenes or foregrounds more clearly visible without the typical "washing out" that can occur with traditional contrast adjustment. Recommended for dark scenes where detail may be difficult to notice, Contrast Mode is also combined with Sharp Mode to provide a clearer viewing experience.

In an effort to reach a broad spectrum of consumers from around the world, Toshiba's new XDE technology and the exciting experience it delivers, will be featured in an extensive print and online advertising campaign. This includes placement on NBCOlympics.com, a site that signifies strength, performance, diversity and unity among many. A new Web site, http://www.toshibaxde.com, will be launched to help educate consumers on the benefits of XDE technology and how it works so they can experience the best of what this new technology has to offer and enjoy their DVD movies in near HD quality.

XDE will be launched today onboard the XD-E500 1080p/24fps Upconverting DVD player. Featuring XDE technology, the XD-E500 also incorporates key features found on today's upconverting standard DVD players such as HDMI-CEC, DivX certification, JPEG capability, MP3 and WMA playback and much more in a slim, high-gloss cosmetic design to complement today's HDTV.

The XD-E500 is shipping this month with an MSRP of $149.99 and can be found at authorized retailers nationwide. For more information on XDE please visit http://www.toshibaxde.com or http://www.tacp.toshiba.com.

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Consumer uptake of Blu-ray players is lagging with the exception of PlayStation 3, according to ABI Research.

An abstract for the research brief "Blu-ray: Consumer Survey Results" called the PS3 "a bright spot" in the Blu-ray picture.

"While you might think gamers purchase fewer movie discs than others, we didn't see any significant evidence of that in our results," said ABI principle analyst Steve Wilson. "PS3 console shipments will go a long way to help bring down manufacturing costs and drive down Blu-ray player prices."

Outside of PS3, however, consumer adoption of Blu-ray players is slower than the industry would like, ABI said.

A survey of 1,000 found that over half of the respondents have no plans to purchase a Blu-ray player. Twenty-three percent said they are likely to buy a player, but not until 2009.

Most consumers are apparently happy with their standard DVD players, as they don't require the purchase of a high-def TV. Half of those polled rated Blu-ray quality as "much better" than DVD, but 40 percent found it only "somewhat better."

Wilson added, "We expect that [Blu-ray] player prices will remain above $300 for Tier One models for the remainder of this year."

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